core point of view
Under the new normal of coal price and electricity price, thermal power assets are expected to usher in revaluation
The fundamentals of thermal power have been in a dark moment, and under the new normal of coal prices and electricity prices, it is expected to release greater performance flexibility. The long-term dislocation between “market coal” and “planned electricity” is expected to be gradually corrected under the guidance of policies. At that time, thermal power will weaken periodically and return to public utility attributes. It is expected to create sufficient cash flow with stable ROE returns and support transformation and development. Capex or sizeable dividends. Its abundant cash flow will help thermal power companies to start their “second venture”, and the former thermal power leader may have the most potential to become a new energy giant in the future.
The new power system is advancing rapidly, and the value of flexible transformation of thermal power is highlighted
The “Notice on the Transformation and Upgrading of Coal-fired Electric Power Plants in China” clearly states that during the “14th Five-Year Plan” period, 200 million kilowatts of coal-fired electric power units will be completed in a flexible transformation, and the system regulation capacity will be increased by 30-40 million kilowatts. The “14th Five-Year Plan” Modern Energy System Plan mentions that by 2025, the proportion of flexible power sources will reach about 24%, and it reiterates that the scale of flexible transformation of coal power units will exceed 200 million kilowatts. On the one hand, the flexibility transformation of thermal power will enhance the synergistic value of thermal power assets and green power resources, and will also bring a considerable incremental market to the thermal power industry chain.
The rigid demand of nuclear power is unprecedentedly prominent, and it is expected to usher in a good opportunity to accelerate
Based on the calculation of future power supply and demand, we believe that nuclear power is expected to usher in accelerated development. As a near-zero-carbon power source and a base-load energy source that is likely to replace thermal power on a large scale, the value of nuclear power in the future new power system will become increasingly prominent. The calculation results under the neutral assumption show that in order to avoid the power shortage crisis, the demand for new nuclear power units during the 14th Five-Year Plan period may exceed 60 units. The nuclear power industry chain is expected to usher in unprecedented development opportunities.
The rapid growth of wind and solar installed capacity has given rise to opportunities for the accelerated development of the pumped storage industry
Pumped storage is an economical and reliable grid-side flexible resource. The installed capacity of pumped storage in China accounted for 18% of the installed capacity of wind power and photovoltaic power generation in 2014 to 6% in 2021. In the future, with the large-scale grid connection of wind and power, the power system will have a large demand gap for pumped storage. According to the “Pumped Storage Medium and Long-term Development Plan (2021-2035)”, the total scale of pumped storage will be more than 62 million kilowatts in 2025; by 2030, the total production scale will be about 120 million kilowatts. Under the two-part electricity price mechanism, in the future, pumped storage power stations are expected to participate in medium and long-term electricity transactions, spot market transactions, and ancillary service markets to obtain diversified benefits.
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